The larger point here is that concantenating strings (i.e., joining them together with ..) just joins them exactly as is, so if you want spaces in there, you need to make sure they're included explicitly. So, as you found, send("hydra armclamp "..target.." "..arm) or send("hydra armclamp".." "..target.." "..arm) would both work, though the latter is obviously a bit more cumbersome.

If you want something that's cleaner for more complicated strings, it would be worth looking into the string.format() function. In this case, you could do send(string.format("hydra armclamp %s %s",target,arm)), where the %s indicates a wildcard with a value specified by the subsequent function arguments. It's a bit more complicated, especially for simple stuff like this, but can make for much more readable code in more complicated cases.